Equities Market Review and Outlook: Pulled back from 4 weeks of positive momentum

LAGOS (Capital Markets in Africa) – The Nigerian equities market pulled back from 4 weeks of positive momentum, depreciating 1.8% W-o-W. The All Share Index (ASI) trended southwards on 3 out of 4 trading sessions declining on Tuesday (-0.2%), Wednesday (-0.9%) and Friday (+0.7%) while gaining 8bps on Thursday. Market capitalization waned by N172.5bn to settle at N9.6tn. However, activity level was mixed during the week as average volume rose 7.0% W-o-W to settle at 233.7m units while value traded fell 12.2% to settle at N1.6bn W-o-W.

Sector performance also weakened with all indices trending southwards. The Industrial Goods index declined the most, down 5.3% W-o-W on account of price depreciation in WAPCO (-13.9%) and ASHAKACEM (-7.6%). The Banking index followed suit, down 2.8% on losses in ZENITH (-6.4%) and GUARANTY (-2.3%). Likewise, the Consumer Goods index depreciated 2.7% W-o-W due to losses in PZ (-10.0%) and GUINNESS (-9.7%) after PZ declared a N1.5bn loss in its recently published Q1:2016 result joining GUINNESS who submitted a similar result few weeks ago. Similarly, the Oil & Gas and Insurance indices fell 12bps and 8bps W-o-W respectively as losses in FORTE (-3.6%), TOTAL (-2.7%) and CONTINSURE (-4.8%) dragged both indices.

In line with market performance, investor sentiment deteriorated, as reflected by market breadth which eased to 0.8x (from 1.0x the previous week) as 27 stocks advanced while 33 declined. The best performers for the week were 7UP (+13.7%), FCMB (+8.4%) and CHAMPION (+8.4%) while WAPCO (-13.9%), WEMA (-12.5%) and CAVERTON (-11.8%) were the worst performers. Sentiment in the coming week may further wane as investors remain cautious ahead of Q3:2016 corporate releases.